26th January 2026 | Emma O’Meara | Employment, Employment Rights Act, Employers

The UK employment landscape is undergoing a significant shift. On 18 December 2025, the Employment Rights Bill received Royal Assent and became the Employment Rights Act 2025, marking the most wide-ranging reform of employment law for decades.

The Government estimates that more than 15 million workers will benefit from strengthened rights, including changes to sick pay, family leave and protections for those in insecure work. For employers, the focus now turns to understanding what is coming and when.

Key Changes for Employers

Most of the Act’s provisions will be brought into force in stages across 2026 and 2027. While this gives employers time to prepare, it also means planning ahead to avoid last minute compliance issues.

  1. Unfair Dismissal Rights (from January 2027)

One of the most significant changes relates to unfair dismissal:

  • the current two year qualifying period will be reduced to six months
  • the cap on unfair dismissal compensation will be removed, increasing potential exposure

As a result, employers will need to ensure dismissal decisions are fair, well documented and defensible at a much earlier stage of employment.

  1. Enhanced Day-One Rights (Some Already Confirmed)

Several rights will apply from the start of employment, including:

  • statutory sick pay payable from day one of sickness, with the lower earnings limit removed
  • entitlement to paternity leave and unpaid parental leave
  • a new statutory right to bereavement leave

These changes will affect absence management, payroll processes and workforce planning.

  1. Zero-Hours Contracts and Flexible Work (2027)

The Act includes stronger protections for workers on zero-hours contracts, including rights to contracts reflecting actual hours worked and compensation for short-notice cancellations.

Meanwhile, flexible working is expected to be promoted further, with future policy consultations anticipated to strengthen employee rights in this area.

  1. Trade Union and Industrial Relations Duties (October 2026)

Employers will be required to provide information about trade union rights as part of employment documentation and on an ongoing basis. This forms part of a broader shift towards increased employee engagement and transparency.

Implementation Milestones

Date

Key Changes

Dec 2025

Royal Assent & repeal of Strikes (Minimum Service Levels) Act 2023

Feb 2026

Industrial action protections

Apr 2026

SSP Reform, Fair Work Agency, day-one family rights, trade union changes, whistleblowing expansion

Oct 2026

Fire and rehire limits, extended tribunal limits, enhanced union and harassment protections

Jan 2027

Unfair dismissal qualifying period cut to six months and uncapped awards

Throughout 2027

Zero-hours protections, bereavement leave, further flexible working and redundancy reforms

 

What Employers Should Do Now

  • Review policies and contracts – Start auditing existing documentation so changes can be implemented in a planned and proportionate way.
  • Train managers – Many of the reforms will affect day to day decision making, particularly around dismissal, absence and flexible working. Manager training will be key.
  • Communicate with staff – Clear and timely communication helps manage expectations and supports positive employee relations as new rights come into force.
  • Assess risk and exposure – With uncapped unfair dismissal awards on the horizon, employers should review how decisions are recorded and how risk is managed across the business.

The Employment Rights Act 2025 signals a clear shift towards stronger employee protections. Employers who act early will be better placed to manage risk and adapt their people practices with confidence.

If you would like support preparing for these reforms or updating your policies, please get in touch with Sherrards’ Employment & Immigration team.

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